The Covid-19 pandemic has impacted political, social, and economic spheres by altering how individuals, businesses, and governments operate. It devastated the healthcare industry, exposing hospitals and medical facilities to conditions not witnessed in the past century. The pandemic did not have a devastating impact only on public health but also on other sectors such as the global economy and financial markets.
Many businesses shut down during the pandemic, creating an unemployment crisis. Formerly employed people were left without an income, forcing governments to intervene and provide stimulus package, housing benefits, and food assistance. Providing these services increases government spending, and the situation may force states to borrow funds.
Unemployment hampers economic growth. Unemployed persons lack a disposable income to spend on goods and services, meaning that they contribute less to the economy. Reduced goods’ demand forces manufacturing companies to scale down production, cut employee wages, and pay fewer taxes to the government. Unemployment caused by the pandemic slowed economic growth by lowering gross domestic product.
The Covid-19 pandemic interrupted the global supply chain. Factories closed to mitigate coronavirus spread, undermining international trade. For example, many countries rely on Chinese goods, and when the nation shut down its factories, the impact was felt worldwide. Businesses could no longer import raw materials or finished products from China, hampering production and trade. Almost a year and a half later, the supply chain interruption still affects businesses. For example, chip shortages have forced car manufacturers such as Ford to slash vehicle production. https://www.cnbc.com/2021/06/30/chip-shortage-causes-ford-to-cut-vehicle-production-at-several-plants.html. The shortage stems from demand shift induced by the Covid-19 pandemic.
The pandemic negatively affected the housing market. The housing market is a primary economic driver, and when it is underperforming, the whole economy suffers. The stay-at-home restrictions, business closures, and extensive lay-offs reduced real estate demand, leaving landlords and housing companies with vacant properties. Reduced demand caused rents to drop by margins ranging from 10% to 35%. The decline in construction activities adversely affected players in the industry such as insurance companies, banks, plumbing providers, raw material suppliers, architects, and designers. The housing market is starting to recover, but the pandemic has had a massive blow on the sector.
Income loss due to the pandemic contributed to poverty, homelessness, and purchasing power loss. These conditions impede economic growth. The pandemic took away people’s wages and salaries, leaving millions without earnings. Some people solely rely on employment income, and losing a job forces them to use savings or borrowed money to pay bills and buy food. Income loss has undesired financial and economic outcomes.
Reduced government revenue
Due to unemployment caused by the Covid-19 pandemic, governments had to support the unemployed population through stimulus packages or other financial aid. Governments lost substantial tax revenue because the pandemic left millions without jobs and reliable income sources. Countries also lost revenue when companies, including airlines, hotels, and tour & travel firms, went out of business. A decline in taxes and increased government spending has negative short-term and long-term impacts on a country.
The entertainment industry is another economic sector adversely affected by the pandemic. Ban on mass gatherings shut down music festivals, sports events, and other economic activities that attract huge crowds. Football tournaments such as Ligue 1, Premier League, and La Liga lost a share of advertisement revenue.
Furthermore, football clubs lost match day income because fans could no longer buy tickets. The situation has forced football clubs to sell players or implement other drastic measures to prevent going bankrupt. Although developed countries are starting to open entertainment events following vaccinations, many developing nations still ban all public gatherings. It might take years for the entertainment sector to resume contributing to the economy as it was before the pandemic.
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